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As Associated British Foods (ABF) updates the market Sheridan Admans, investment research manager at The Share Centre, explains what it means for investors.

ABF has warned that it expects sugar profits to be low this financial year due to an estimated lower production level of 1.13m tonnes, compared to 1.32m tonnes last year. However, investors should be encouraged by the Q1 results with grocery and agriculture revenues in line with last year and Primark delivering a magnificent result. The budget clothing retailer saw sales 25% ahead of the same period last year, driven by strong like for like sales and an increase in sales space through opening 14 new stores.

Operating cash flow has also improved, supported by higher profits and expansion projects reaching completion.

We continue to recommend ABF as a ‘buy’ for investors seeking a moderately defensive business that offers potential for growth. Looking ahead we believe the business is well positioned to see some improvement in its grocery business and continued growth from its retail operation.

All information given including prices, yields and our opinion is correct at the time of publication.  Our opinions on investments can change at any time and for our latest view please go to www.share.com.  To understand how our Advice team arrive at their views please read our Investment Research Policy.

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